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How to cut expenses and manage cashflow

Piggy Bank

Small businesses have shut down all across the country as a result of the COVID-19 pandemic, and many of those remaining have seen massive losses in revenue. If you’re dealing with negative cash flow problems, you’re not alone. Actually, consider yourself lucky that you still have a business to run.

State and local governments are starting to loosen stay-at-home restrictions, but our economy is not out of the woods yet. Here are some tips for lowering your business expenses and managing your limited cashflow until our situation stabilizes

Cut costs.

If you haven’t done so already, diligently review all of your outgoing expenses and see what can be minimized. The goal is to get the cash flow positive again, and if your revenue has been drastically reduced, this may require some pretty severe cuts.

Annual, quarterly, and periodic expenses

Get out your calendar and be aware of any recurring fees that might be coming due before the end of the year. Things like vehicle registration for a company car, and professional license renewals usually recur annually, and tend to be expensive. They’re probably unavoidable, so just be aware that they’re coming up so you’re not caught off guard.

Association fees and memberships are often charged annually as well. If you definitely don’t have the cash on hand at the moment to cover an expense like this in the foreseeable future, don’t feel bad about canceling your membership. Call ahead and see if it would be possible to rejoin once things are back to normal. Remember, you’re not the only one going through these hard times.

Recurring expenses

Look carefully at your monthly credit card and business checking account statements so you can be watchful of recurring fees. Are there subscriptions you have that aren’t essential? Cancel them. Can you make any changes to payroll? What about cutting back on utilities? Negotiating lower rent? Or maybe even moving out of an office space entirely? Assess your situation carefully and decide what can be minimized or cut.

New purchases

Periodically, you’ll have to buy new equipment, which can require major investments and eat up significant portions of your cash on hand.

Investigate and see if it’s possible to set up a payment plan for large purchases instead of paying in one lump sum.

For other equipment, it might be more cost-effective to lease instead of buy as well.

Optimize cashflow

Once you’ve cut out all your unnecessary expenses, you may have to get strategic with how and when you spend the revenue available to you.

Assess your current balance

No one can blame you if you’ve become weary about checking your current account balances, but being aware of how much money you have available right now.

Be diligent about invoicing

In order to have a cashflow, you have to actually get paid. That means staying on top of your invoicing. Get in the habit of submitting invoices as soon as you complete your work. And be sure to set reminders to double-check they’ve been paid, and follow up if they haven’t.

You can actually do all of this from your Azlo dashboard with their invoicing feature.

Give less credit

Letting clients pay late is always a risk, but with the state of the economy, it might not be a risk you can take anymore. If a client is asking for credit, chances are they’re having cash flow issues, just like you are.

The U.S. Small Business Administration actually offers a product called a Dun & Bradstreet report that gives you more insight into your client’s finances, or you can also ask customers to fill out a credit application so you are not lending blindly.

Ultimately, only you know your relationship with your customers, so be respectful and pay attention to your gut.

Ask for partial payments or deposits

If your business is about providing a type of service where you’re paid on a per-project basis, it would be totally reasonable to ask for partial payments or deposits before you begin your work.

An architect or interior designer, for instance, may charge a 10% fee upfront before they begin their project. Screenwriters are often given a commencement fee before they start outlining a script.

These deposits and fees are part of the overall fee agreed-upon for a project—it’s just standard for clients to pay in installments as a way to protect the service provider.

This keeps cash, well, flowing so you can cover your expenses and actually focus on the work you’re doing instead of rushing to completion so you can collect a big payday.

Delay payments to vendors

Many businesses are having cash flow issues right now, so think of this as a last resort, but one of the ways to maintain a positive cashflow is to delay payment to your vendors. Unless there are incentives for paying early or right when you receive an invoice, check in with your vendors to see how long you can go with delayed payments without harming your relationship, or incurring late fees.

Increase cashflow

If you’ve made major cuts to your expenses and still can’t attain a positive cashflow, your only choice will be to fill in the gaps or find new sources of revenue.

Sell assets

In the same way, you diligently reviewed your budget, look at your stockpile of equipment and inventory, and see if there’s anything you don’t need or want. If you’ve ever practiced the Marie Kondo Method in your home, you might be surprised by how it can be applied to your business.

If you come across any old equipment that’s become obsolete or that’s just taking up space, considering selling it to generate quick, liquid cash. The newfound tidiness of your workspace and storage will be an added bonus.

Apply for loans, grants, and other financial relief

Congress has approved a number of economic disaster relief programs, many available through the Small Business Administration. Information about these programs are constantly being updated, and more are being added. Visit this page for more information.

Secure a business line of credit

If PPP funds have been depleted or you don’t qualify for any government relief programs, business credit may be an option for filling any cashflow gaps. Credit cards can be great for handling day-to-day purchases, but loans can bolster your bank accounts while also accruing less interest over time.

Hustle and pivot

Many small business owners had to make major adaptations to the offerings and structure of their businesses to survive the pandemic and continue generating revenue. Pivoting the focus of your products or services to what the market really needs now has proven to be an incredibly effective strategy for many companies. But in situations where that’s not possible, you may have to hustle for income from side-gigs.

This is a challenging time for everyone, but with these creative and strategic adjustments, you and your business can emerge from this period with a stronger foundation than ever. And weathering a storm like this will connect you more deeply to your purpose as an entrepreneur.

Dustin Clendenen
Dustin Clendenen is a Los Angeles-based writer focused on personal finance, social impact and technology. His work has appeared in Yahoo! Finance, Business Insider, and Upworthy. Learn more at

Hi there! This post exists to offer you (hopefully) useful information and insights, but it cannot take the place of personalized professional advice. Please consult a qualified expert if you have questions about your business. Also, Azlo doesn’t endorse any third-party sites that are linked here.

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